IR Selling

Sales up and profits down at Graze, following multichannel and US investments

Graze [IRDX RGRZ] has reported rising sales but a drop in bottom-line profits, reflecting its investment in multichannel and its expansion into the United States.

The multichannel health snack retailer, which started selling mostly online but since 2015 has expanded to supply its snacks to third-party stores around the UK, reported revenue of £75.8m in the year to February 28 2017, 8% up on the same time last year. Gross profits rose by 8% but, after one-off costs, EBITDA (earnings before tax, interest and asset writedowns) fell to £4.7m from £7.8m last time. This, said Graze, followed “substantial investment” in the US operations and the development of its multichannel model. Graze is a Top500 retailer in IRUK Top500 research.

In the three years that Graze has sold online in the US, it has localised its product range for the US consumer, and in 2016 it also started supplying retail stores. Between the US and the UK, Graze now supplies 30,000 stores.

Chief executive Anthony Fletcher said: “Over the last two years we have successfully extended the Graze business from online-only to truly multichannel in both the UK and the US.”

He added: “We are seeing the clear benefits of operating a multichannel model – the insight provided by the direct to consumer channel is fundamental in enabling us to innovate at speed. This gives us a significant advantage in the healthy snacking market where the pace of change is rapid. It has also proven our ability to localise products for new markets quickly, as has been the case in the US.

“We are particularly pleased to have seen the successes we have in retail – retailers appreciate the proven nature of our products, which means they are selling extremely well across the board.

“We have seen a rebound in group profit in the current financial year and approach 2018 with excitement and remain focused on building the world’s leading healthy snacking business.”

Graze was founded in the UK in 2008 by the developers and logistics experts that developed the technology behind LoveFilm. Since then it’s moved from bedroom start up to an international business that employs 500 people and is majority-owned by US investor The Carlyle Group, alongside Octopus Investments and Draper Esprit, as well as its management.